CA could force Safaricom to share its network of Agents

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Kenya’s largest telecoms operator Safaricom could be forced to offer rivals access to its transmission sites and its vast network of mobile money outlets if a draft regulatory report on boosting competition in the sector is implemented.

The recommendations are contained in a draft report that the regulator, Communications Authority of Kenya (CA), is finalizing, an official from the regulator told Reuters on Monday, declining to say when it would be published. An earlier version of the report caused a selloff of the company’s shares when it was leaked in February 2017. That version proposed separating its widely used mobile money business from its telecoms unit due to its dominant size.

Safaricom, which is 35 percent owned by South Africa’s Vodacom, controls 72 percent of Kenya’s mobile market, with close to 30 million subscribers.

The regulator dropped the recommendation to break up Safaricom after the company lobbied heavily against it but retained some proposals in the current draft that the company has said could be damaging to its business.

The current draft of the report, seen by our editing team, says Safaricom should be required to offer access to its transmission sites to its competitors in designated areas where its rivals do not have adequate coverage. It also calls for the major player to open up its mobile money agent network to its rivals, a proposal that has particularly irked the company as it would expose its lucrative M-Pesa mobile money platform to stiff competition.

More than 26 million people in Kenya use M-Pesa, which allows people to send cash and make payments by phone. Michael Joseph, a former CEO who now sits on the company’s board, said the regulator’s proposals were “not the right way to go”. “We do not deny that we are strong but we are strong because we have made the necessary investments to be strong and it would be unfair to criticise us or restrict us because we have made these investments,” he responded when asked about the proposals in the draft report.

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Joseph said rivals had failed to invest in a network of agents, where users carry out services like cash withdrawal. “They want this agent network to be handed to them on a plate,” he said. The regulator would consider the views of operators, including Safaricom, before publishing and implementing its recommendations on boosting competition in the sector, said the Communications Authority’s acting head of public affairs Christopher Wambua.

Safaricom this month criticised the regulator’s mooted proposals including those to control data and call prices. Wambua declined to comment on the specific issues raised by Safaricom.

Safaricom’s rivals, India’s Bharti Airtel and Telkom Kenya, owned by London-based investment group Helios, have long demanded that the regulator act to curb Safaricom’s dominance. Safaricom denies any allegations of abuse of dominance. Telkom and Airtel Kenya are reportedly considering a merger in order to take on Safaricom’s might.

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